Into European trading and [EUR/USD] had caved itself a 1.3525/50 groove. Offers into 1.3545/50 helped reject the initial tests of the topside and ahead of the German and European data and spot worked lower. Bids into 1.3530/35 propped but EUR/GBP sales weighed after Sterling rose on the unexpected CPI headline. Cable buying offset the cross weakness but EUR/USD was forced to continue range-trading after the price failed to hold the initial break above 1.3550.
1.3552 printed but despite the above expectation ZEW data (16.5 Vs 10.0 F'cast) the pair has since eased back sub-1.3550. Looking ahead, dealers look to the 12:30 GMT release of the latest US CPI to add the next directional bias. March data is expected at +0.6% M/M with the core up 0.2%. Should the data diverge from the consensus then central bank supply up at 1.3570/75 will be eyed while on the downside buyers trail to 1.3500 with stops noted below here.
Also set for release at 12:30 GMT are Housing Starts and Real Earnings (both March). Plosser is also scheduled to speak with March Industrial Production data following at 13:15 GMT.
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